prepared by AsiaConstruct Team Research Centre for Construction and Real Estate Economics Hong Kong Polytechnic University (www.bre.polyu.edu.hk)
for The 14th AsiaConstruct Conference 23rd – 24th October 2008 Tokyo, Japan. AsiaConstruct14 Team:
Michael Anson1, YH Chiang2, Eddie CM Hui2, Patrick TI Lam 2, Stephen WK Mak2, HY Ng2 and Eva XT Yin2, 1 Professor Emeritus, Faculty of Construction and Land Use, The Hong Kong Polytechnic University. 2 Department of Building and Real Estate, The Hong Kong Polytechnic University.
About the Research Centre for Construction and Real Estate Economics (RCCREE): The RCCREE is the Hong Kong Polytechnic University Centre for solution oriented research and consultancy in construction and real estate economics. It undertakes internationally relevant multi-disciplinary research that supports the advancement of the construction and real estate industries in the following areas: Economic Policy and Institutional Analysis, Real Estate Economics, Construction Economics, Housing, Human Behaviour in Economic Decision making, and Value Management and Facilities Performance. For further information, please contact Professor Francis K.W. Wong, Director of RCCREE (email@example.com) or Professor Eddie C.M. Hui, Deputy Director (firstname.lastname@example.org).
[As at October 2008, ¥1,000 = HK$ 73.14; HK$1 = ¥13.67; US$ 1 = HK$ 7.76]
Hong Kong enjoyed a high growth rate in GDP in 2007 (6.4%), with a per capita GDP of US$29,914. While the service sector saw the highest growth (7.4%), the growth rate of the construction sector was 0.04%. The construction sector recorded a positive growth rate since 1997. The Economics outlook for the first half of 2008 was still optimistic. However, the consequences following the collapse of the property market in US, the bankruptcy of Lehman Brothers and the bail out of other financial institutions (e.g. AIG, Freddie Mae and Fannie Mae) by the US government, together with the slump of the stock markets, people are becoming pessimistic towards the latter half of 2008 and next year. While the slowdown in growth of advanced economies in Europe and the US will have some impact on the economies of emerging markets and the Mainland, the sustained rapid economic growth of the Mainland and its increasingly intensified economic integration with Hong Kong will to a limited extent help the economic development and cushion the impact of the slowdown on Hong Kong. With respect to the labour market, the unemployment rate has hit an all-time low at around 4%. The unemployment rate of construction sector kept decreasing in these consecutive as there were more job vacancies created by the major projects, e.g. Hong Kong West and Tsuen Wan drainage tunnel, rebuilt the Lo Wu Correctional Institution etc. Construction Cost has picked up after it hit a bottom in 2003. It is more or less in parity of 1997 when the construction cost was at its peak. The high construction cost can be reflected from the increase in construction materials. The prices of major construction materials such as hardwood and steel products have risen by as much as 50% over 4 years. While there was no published wages for construction workers, the wages have not risen in par with the rise in living standard as reflected from the many demonstrations of the construction workers and 40-day strike by the bar benders in Hong Kong, which has led to a near stand-still of the construction industry. The salaries of ATPC have risen by an average of 9-13% over 2 years, with the exception of project managers and safety officers. There is no institutional or legal entry barrier to the construction market in Hong Kong. Foreign firms are required to fulfil the same set of criteria as local firms to get listed with the authority. Hence, the import of construction services does not appear to...